Posted
by
Zonk
on Friday October 12, 2007 @09:04AM
from the nickel-and-dime-you-to-death dept.

Spritzer writes "Yesterday, the House Judiciary Committee approved an amendment to the Internet Tax Freedom Act of 1998 which would prevent the tax ban from expiring. However, the amendment also eliminates tax protection for VoIP services. 'The amendment, offered by committee Chairman John Conyers Jr., a Michigan Democrat, would extend the ban on Internet access taxes until Nov. 1, 2011. ... The Conyers amendment would allow nine states with Internet access taxes to continue them. It would also narrow the definition of Internet access, excluding services such as VoIP from the tax ban.'"

Honestly, I'm tired of all this tax BS. Tax my net income and be done with it. Having taxes simplified would in fact save money for all. Just think about all the money spent on supporting, enforcing, collecting, evading and what-not, on multiple taxes.
I know, I know, I'm thinking like an engineer and not a politician or tax-attorney.

The problem with getting this ratified/approved is the people who would be hit the hardest with a flat-tax (read: wealthy individuals) would have the legal team, time and money to fight the flat-tax, whereas the people who would benefit from it (read: 'middle-class') simply do not have the money, time or legal team to lobby for it.

Umm... With a flat-tax, you pay more if you make more. As it is now, there are hundreds (thousands?) of little loopholes and tax breaks--which some of them would still exist with a flat-tax--which the wealthy people know about, or make enough money for them to apply to them, or they pay someone else to know for them.As it is now, the wealthy pay less (percentage wise) than the poor in taxes because they maintain a much better understanding of the loopholes and laws. The poor do not, because they do not have

Sales taxes screw the poor. That's why. I don't care how you define "essentials". It isn't going to be broad enough to keep the poor from paying a disproportionately large amount of taxes. Poor still have to buy cars. They still have to buy clothes. So you either put a maximum price for clothes so that people who buy luxury clothes are the only ones who pay the tax or you try to come up with some special tax card that counts how much you have spent and doesn't charge tax until you exceed some threshol

You make a very valid point... I never really thought of it that way.
Especially considering that I've been somewhat of a supporter of the fair-tax plan.
Thanks for the input... I'll really keep that in consideration.
GR

The only country I have been to that gets all it's tax from sales tax is Vanuatu.

Vanuatu is a corporate/rich person tax haven. There is advert after advert advertising this fact on the plane while arriving.

It works because Vanuatu has a proportionally large tourism industry of ~20-25% of the population in tourists each year, very low cash employment rate, low wages (except expat tax/financial consultants) and most of the local economy is subsistence agriculture in traditional villages - the people very

The Unfair National Sales Tax proposal does screw the poor, but it also double-taxes retired people. For currently working people, if the government takes the same amount of money as income tax or consumption tax, it's pretty much a wash. But if you're retired, any money you've saved has already been taxed once, so a consumption tax means you're going to pay twice. I'm a late Baby Boomer, and I do hope to retire some day, and Social Security is going to be pretty bankrupt by then so I'll be living off sa

The rich don't spend their money. That's why they are rich. So is this the same rich that are always criticized for having multiple big expensive houses, big expensive yachts, big gas guzzling cars? How is it they have these things that they are constantly criticized for if they don't spend money?

a poor person would pay almost as much in taxes as someone making a million plus - this isn't possible, unless the person making a million plus only spends a

You make a number of assertions, but you don't even attempt to back any of them up. The current tax structure is regressive, that is, the percentage of income you pay in taxes increases as your income increases. A flat tax would simply "flatten" that structure. This will absolutely force the lower income taxpayers to pay more in taxes if it is to remain revenue neutral.

A not-very-well advertised part of all of the flat tax schemes that I have seen is that they are NOT revenue neutral. They are all ac

Your "net" under what calculation? Excluding your 401K contributions? Before or after your donations to the Social Security scheme? Including the amount your employer spends on your health insurance? Excluding expense reimbursements, but including work-related expenditures?Flat-taxes are one part of the solution, but not as big a part as people imagine. First you need a consistent way of calculating "net" that is fair, that applies to all income brackets equally, and that encourages wealth formation.

Agreed, wealth doesn't perfectly correlate with intelligence any more than poverty does with stupidity.Statistically though, I'd wager that the likelihood of exhibiting money-losing behaviors tends to drop as wealth increases, and that the likelihood of having a decent understanding of complex financial issues grows along the same trendline. If I had to pick someone at random to help me understand and cope with a new tax law, and all I knew about them was their income, I wouldn't be sifting through the bott

VOIP is passed out in the corner; Online Video is ordering shots for Online Retailers -- they won't last long. State Legislator is pissed that he was not invited and has called the cops to shut this party down.

Now that Vonage bill, which was originally $15, and has crept up to about $20 due to various fees, will probably end up being just as much as a similar regular landline once they start taxing the crap out of it. Was a good thing while it lasted.

Hmm - how does Voice Over Internet Protocol not constitute internet access? Will this then be applicable to things like Skype, and other hybrid (i.e. video/voice/chat) VOIP services that don't resemble POTS so strongly?

Hmm - how does Voice Over Internet Protocol not constitute internet access? You looking at this the wrong way, this isn't about rational laws, this is about states seeing a decline in revenue due to people giving up their (taxed)landlines for VOIP(currently untaxed). So to keep the state coffers full, we slip in an exemption for VOIP so states can keep collecting money on phone service.

You looking at this the wrong way, this isn't about rational laws, this is about states seeing a decline in revenue due to people giving up their (taxed)landlines for VOIP(currently untaxed). So to keep the state coffers full, we slip in an exemption for VOIP so states can keep collecting money on phone service.

Ummm...if that's the goal, then how is that law not "rational"? Seems a pretty rational way of approaching things.

It's not "rational" because it's the same sort of line for internet services as with VOIP, the difference is that VOIP plugs into a phone.

The argument is that this looks an awful lot like Congress saying that you can be taxed on the water that you use on your lawn, but not the water you drink. It's the same water, how could you tell either way?

I don't have VOIP services, so my ability to care, as well as my knowledge on the subject, is limited.

The argument is that this looks an awful lot like Congress saying that you can be taxed on the water that you use on your lawn, but not the water you drink. It's the same water, how could you tell either way?

Well I do think its rational that a legislature could look to the use of a product rather than the means the product utilizes to effect that use. For example, in your analogy, wouldn't it make sense for a legislature to say "clean, cheap drinking water is a right...let's put as few restrictions on w

Eh, I think we're looking at it the wrong way, anyhow. VOIP (as a phone replacement) involves a lot more than internet packets; There would be places where the digital signal would be converted into the analog signal for use with normal phones, and since phones are taxed, it's reasonable to tax VOIP.

Plus there's the whole service provider thing, where your VOIP service may not be provided by your ISP, so while it operates over the internet, there's a difference in what precisely they're taxing.
Pick your a

There would be places where the digital signal would be converted into the analog signal for use with normal phones, and since phones are taxed, it's reasonable to tax VOIP.

See that just makes it more complicated though. What if I only call IP to IP? What if I have a shared line appearance in another state, how are things divided up? Hell, what about another country?

I work for a VoIP provider, I have customers all over the world. The accounting department will commit mass suicide if something like this goes through, given the effort involved in figuring out how the taxes will work.

Let's say 555-321-1234 is set up as a line appearance on phones in Cleveland, Denver, and Ki

The argument is that this looks an awful lot like Congress saying that you can be taxed on the water that you use on your lawn, but not the water you drink. It's the same water, how could you tell either way?

I know! They can dye the potable water an obnoxious pink color. That way, if you're caught with a pink lawn (remember that experiment in elementary school with the celery and food coloring?), they'll hit you with a big fine.

For those not familiar with the moderately bizarre taxation schemes brought into existence by agribusiness, diesel sold to farmers to fuel their power farming equipment is "untaxed" and dyed red at the distributor to distinguish it from "road" diesel, which is taxed as a motor fuel. If you're driving your diesel W Golf down the street and your fuel tank starts leaking red diesel, expect a big retroactive tax bill and maybe a prosecution for tax evasion.

For those not familiar with the moderately bizarre taxation schemes brought into existence by agribusiness, diesel sold to farmers to fuel their power farming equipment is "untaxed" and dyed red at the distributor to distinguish it from "road" diesel
It's also called #2 home heating oil - no difference. It's also sold to the construction/excavation industry to run site equipment like track hoes and site trucks - whatever doesn't go on the road the runs on diesel.
I don't see how this is all the bizarre -

You looking at this the wrong way, this isn't about rational laws, this is about large TELCO'S seeing a decline in INCREASING PROFITS due to innovative and competition. So to keep their profits high and investors happy, they slip in a few free lunches for lawmakers so they include an exemption for VOIP so the Teclo's can keep the competition down.

I thought the whole point of taxing individual services was so that the incoming tax money was directly proportional to the outgoing expenses? For whatever reason we needed a tax on POTS, fine. Now, if that tax money is no longer needed to maintain POTS then why do you still need that money for VOIP?! Also, if this shit isn't supposed to matter then why bother breaking the taxes up at all? Why not just increase the income tax? Makes so sense having separate taxes for services that don't actually reflect the

Hmm - how does Voice Over Internet Protocol not constitute internet access? Will this then be applicable to things like Skype, and other hybrid (i.e. video/voice/chat) VOIP services that don't resemble POTS so strongly?

The summary is confusing, IMO. The only thing the article says about VOIP is:

But other lawmakers have expressed concerns about a permanent ban, saying it would hurt the ability of state and local governments to raise funds. A permanent ban would give lawmakers little recourse against telecommunications companies that try to sneak other services, such as VoIP, into the tax ban, critics have argued.

So it sounds like VOIP is not excluded from the tax ban. Apparently some congressmen are concerned about loss of telephone tax revenue as people switch to tax-free VOIP.

Actually - I read that as VOIP certainly being excluded from the ban (though I agree there isn't much in the article). But my point really is how are they defining VOIP - I think there are and will be plenty of services that utilize packetized voice over the internet that don't necessarily resemble "Internet Phone Service" but by my definition certainly are VOIP. If you're going to ban a tax on "Internet Services" it seems awfully strange to exclude certain things that are no less internet services than any

Actually - I read that as VOIP certainly being excluded from the ban (though I agree there isn't much in the article).

Is there any way we can see the proposed amendment instead of just the blurb that Infoworld decided to print? I know Sunlight Foundation [sunlightfoundation.com] backs sites that publish some of this stuff but I have no idea where to find a document like this.

As for how to define VoIP and decide what phone services are close enough to the Telcos territory to get smacked they'll just make up some vague text they can use to sue competitors with later. I wouldn't be surprised if a telco industry body wrote the text of the amendm

Going by the data on the 2005-2006 cycle at OpenSecrets [opensecrets.org], most of them get a fair chunk of money from some telcos.

Conyers had contributions from National Cable & Telecommunications Assn, Comcast Corp, AT&T Inc in the range of over $9,000 each (they are all in the list of his top contributors at Open Secrets [opensecrets.org]).

Sanchez had contributions from AT&T Inc of $10,000.

Cannon had contributions from AT&T Inc, Verizon Communications, and National Cable

How does it not constitute internet access? Simple. Lets say Verizon or AT&T comes along and says, "We're no longer running copper POTS lines to houses, we are only using fiber" But the problem ends up being those people still need phone service.

So what they do is run fiber to the house and install a VOIP box on a limited bandwidth connection (such as 128k), but they configure it to block all traffic except the ports that their VOIP service uses. So now you have phone service as you normally would,

Hmm - how does Voice Over Internet Protocol not constitute internet access?

OOh! That's an easy one. See, you're thinking about this from a technical standpoint. Of course there's no difference technically. However, you have to think like a congressman. Who has a lot of money to give to your campaign? Who has really nice jets that they use to fly you to golf outings? Who? Oh, yes! It's the phone companies! That's why it's different! Because even though they say competition is important to a free market, t

There are lots of uses of VoIP that do not use "the Internets" as transport. I used to work for one such telecom provider. Yes, it is VoIP, yes, it travels data lines, no those lines and the VoIP does not go over "the internet" between customers or other endpoints, it either goes directly over the internal private network, or hits a gateway and runs out the pots network: the VoIP of it never leaves the cloud/crosses the edge. This provision just says that services like that cant exempt taxes claiming its "i

The idea that some internet based services are taxable and some aren't, when there's no reliable way to classify them makes for a rather broken system.

If pure VOIP starts getting taxed, then it'll just be adjusted so that it's not technically a VOIP service. E.g. is it VOIP if it includes video? What about in-game voice systems? What if it does some random surfing in the background at the same time? Is a system that sends voice clips via email a VOIP system? What if I'm exchanging music or sound effects - do they count as a 'voice'?

If pure VOIP starts getting taxed, then it'll just be adjusted so that it's not technically a VOIP service. E.g. is it VOIP if it includes video? What about in-game voice systems

There are a lot of parts of tax law that are subject to interpretation. Just because it's subjective doesn't prevent them from saying you owe them money.

Here's an easy scenario: VoIP gets taxed when it comes from Vonage or Skype or one of the obvious ones. This goes on for a few years and over time people realize that it's cheaper to buy a World of Warcraft subscription and go use voice chat in Azeroth than it is to buy any phone-only service. The IRS gets wind of it and issues a bulletin clarifying

The more evil interpretation is that unless one can prove that an internet packet wasn't VOIP content, some jurisdiction will try to tax it as VOIP. The possibility of using a tunnel to hide VOIP will just make all such tunnels taxable.

Well if that was the classification rule then it would really be a tax on POTS/VOIP bridges, not on VOIP itself, since a VOIP system doesn't have to be connected to the POTS. Admittedly, not being connected to POTS in any way limits the usefulness - at least until most people switch away from POTS.

finally someone gets the jest of it. this article proves just how dumb so many slashdot users are. it's pathetic to see what some people have come up with as a solution. it proves that they didn't even understand the problem.

Remember the argument we always use about patents and how an electronic version of something isn't any more unique than the non-electronic version (bar tabs and 1-click)? Same deal here. Phone taxes provide revenue for a state, regardless of the medium. If you take those away, as some short-sighted people want, the money will need to come from somewhere else, and it will. There's no such thing as a free lunch.

>Phone taxes provide revenue for a state, regardless of the medium. If you take those away, as some short-sighted people want, the money will need to come from somewhere else, and it will.

I agree, and that's fine.

Put the tax on something clearly defined, rather than trying to tax 'certain kinds' of internet communications. That way, everyone knows where they stand, nobody needs to worry about having to classify what kind of data you are sending, and there'll be no need for lots of lawyers arguing over

I agree that it's stupid but could you explain again how Skype is untaxable?

It's funny that the original reason for a ban on taxing Internet access had something to do with getting people to innovate without the burden of taxes and yet as soon as we see some innovation it's time for it to get taxed.

I can see how you can hide it easily but that doesn't mean you're not supposed to pay the tax on it, just like in a lot of states you're supposed to remit sales tax for out-of-state purchases. So in practice the tax isn't collected but it's not that a tax isn't levied.

I can see how you can hide it easily but that doesn't mean you're not supposed to pay the tax on it, just like in a lot of states you're supposed to remit sales tax for out-of-state purchases. So in practice the tax isn't collected but it's not that a tax isn't levied.

I suspect that after the death of RIAA and MPAA in about 5 years, the biggest enemy of your typical nerd would be governments trying to tax their OSS apps.

And you know nerds don't like doing things because someone above says you have to.

This actually makes sense to me, as much as most of/. will hate it. It means states, and even the feds, can't insert taxes on access or on most things, but it excludes from that ban a service which has a direct analogue in the... analog world. Taxes on phone services such as the Universal Service Fee go (at least theoretically) to extending access to people that don't have it.

Here's what it really comes down to - as taxes decrease from one source, they must increase from another. The government isn't spending less money, so if less people have phone lines, they must make up the money some other way. Like it or hate it, that's the fact. And yes, this means that eventually, there will probably be an internet sales tax. It's just a matter of what congressmen are willing to be vilified in the eyes of the public, in order to get it done. And if there isn't, it just means income tax (both fed and especially state) must be increased, or some other form of taxation found. Your tax burden in general should never be decreased - it's just a matter of how it's taken from you.

"Your tax burden in general should never be decreased - it's just a matter of how it's taken from you."

Why?

Perhaps I'm taking you out of context, but to suggest that taxes should never be decreased... well it's just wrong.

Tax burdens cannot be decreased as long as spending is the same (or higher). Of course we can decrease taxes if our spending goes drastically down, but given the same amount of spending, your burden cannot decrease - as it is, the government spends more than it takes in.

Internet sales tax is a poison pill that will damn near kill internet businesses. It is not the increased prices that would hurt them but rather keeping track of what to pay to whom. There are over 25,000 different tax jurisdictions in the US alone. I live in the City of Fairfax in Virginia. They have their own 1.5% sales tax. If internet taxing was put into place some one would have to keep track of what tax is applicable to what zip code, be able to assess that for every customer upfront, and then re

I was going to say that I agree with you that the dramatic number of tax jurisdictions would make tracking internet tax very difficult... but the more that I think about it, the more I disagree.

First: Software to track taxes already exists, because of sales tax - big companies that have locations in many places already have to track this. It isn't as extensive as full internet tax would need to be (assuming every jurisdiction passes one, which is unlikely, but who knows) but the software would grow with

It's just a matter of what congressmen are willing to be vilified in the eyes of the public, in order to get it done.

The public will see a sound-bite on the five o'clock news, frown and say to themselves "those fuckers!", and forget all about it ten minutes later. In any event, it's more a matter of which Congressmen work out the best deal for substantial cash and political favors from the old-line telcos.

Those bastards don't want VoIP unless they're the ones providing it, and really not even then. No

Just like you pays sales tax for anything you buy online in your state, (there is a RL counterpart), access to PSTN should always be taxed. Either that, or standard PSTN based services need to have no tax on them. I'm sure businesses would welcome that, as taxes from varies entities often add 30 or 40% to their bottom line phone bill!
I think we would all agree, however, that it needs to be like service, IE connected to the PSTN. IP to IP connections should remain untaxed, as the end users have paid and po

You think whoever provides that PSTN termination isn't already paying FCC taxes???? In order to GET to the PSTN, you have to go through some sort of termination provdier, whether that be yourself, vonage, or some other third party. They're already paying to get each call on the PSTN whether it by in the form of their contract for whatever type of connectivity they may have, or per minute fees being assessed by their actual termination provider (who in turn pays the taxes).

Just like the phone bills of old did not have the taxes broken out seperatly, so to VoIP providers dont break them out and pass them on. This bill would allow them to pass those taxes on to the actuall end users, instead of having to pay them and eat the costs.
But I guess we dont really want voip carriers to prosper, so we should make sure they cant pass that cost on to their end users.

No, from elsewhere in this thread it looks like the bill is H. R. 3678 which you can search for (but not directly link to) at The Library of Congress [loc.gov]. The relevant part of the definition looks like:

`(D) does not include voice, audio or video programming, or other products and services (except services described in subparagraph (A), (B), or (C)) that utilize Internet protocol or any successor protocol and for which there is a charge, regardless of whether such charge is separately stated or aggregated with the charge for services described in subparagraph (A), (B), or (C).',

Matter of fact, I don't see anything in the whole bill that says "VoIP". The way I read it, it also excludes anything like TV or radio over IP.

they plan to tax voip when you can implement it with open source solutions. no, my mom doesn't know how to do it. but taxes piss people off just enough that the chances of a nicely packaged solution appearing pretty soon are pretty high. get ready for becoming a criminal because you own a compiler.

I imagine the taxes are for things like SkypeIn and SkypeOut where people are placing calls and generating revenue for Skype, not for Ventrilo. It's easy to track what you pay Skype, no matter whether you use their software or an OSS clone of it.Besides, the summary title really should say "would" rather than "will". A bill being approved by a committee may never come to a vote by the full House if the Speaker doesn't like it. It may not pass that vote if it gets it. It may fail to be approved by the Senate

You must remember this:
A bit is just a bit,
A byte is just a byte.
The fundamental things apply,
As packets go by.

Trying to identify bits for their "content" is a little like trying to tell air molecules apart. Congress is now on the same slippery slope as the Bells, who want to charge extra for "premium" content.

Or do they they think the taxes can be collected by the VOIP companies themselves? But what if my VOIP provider is in Outer Elbonia? They have no infrastructure in my state, or any nexus, for that matter. If I pay my phone bill with a credit card or, better yet, by cash deposit on my next trip there, where's the mechanism for enforcement?

Again, Congresspeople, just because something scratches an itch and sounds "fair" doesn't mean it's even a tiny bit workable.

Essentially they put a tax on one service running over an untaxed line. I see where they are headed with this. They won't simply tax your connection, like they did phone lines, no they will tax individual services on that connection. Clever. Next they'll start taxing e-mail, then IM, then streaming video, etc etc....

The concept of taxing email and IM became obsolete/impossible the moment people moved away from getting those services exlusively from their dial-up ISP. I'd like to see them try to track down every free email and IM service and try to squeeze money out of them. It just won't work.

What I can see is the Bells and other traditional POTS providers trying to weasel out of their traditional taxes owed to the government by claiming to be VOIP providers.

This marks a particularly sad moment in the history of News for Nerds political activism.

While I agree that specifically allowing taxation of voip "for which there is a charge" (the language in the actual law) is a bad idea, it was a bad idea back in 2003 when it was included in the LAST internet tax renewal that became law. The voip language in the current bill is just a restatement of what has been law for 4 years. The fact that an editor here, particularly an editor who feels comfortable passing on political stories, is ignorant of a pretty important provision in one of the most prominent pieces of technology legislation (and a one page piece of legislation at that) does not give a lot of aid and comfort to those who support the tech community on these issues.

Now, if you want to complain about something, this new House bill, and the one currently in the Senate Commerce committee (Not the Wyden (author of the original internet tax ban) Senate bill S.156, or Eshoo House bill H.743) both include a revised definition that specifically only covers services offered by ISPs, opening up non-isp web services (net radio, youtube, joost) to taxation. Big surprise, these narrower definitions are the ones championed by Verizon and ATT and the now ironically named "don't tax the web" coalition.

If your VoIP is distinguishable from other low-latency-QoS traffic, you're doing it wrong. If you have any sort of centralized "provider" (other than maybe a jabber server for cases where a direct P2P connection can't be made), you're doing it wrong. If someone other than a general-purpose ISP is billing you for the packets that just happen to be the building blocks of your VoIP, you're doing it wrong. If it's possible for someone to measure it and tax it (or tap it and see anything other than cipertext)

PK is good fallback position, but while I don't know about you, most of my phone conversations tend to be with people who I also see often in the real world. OTP exchange would be completely viable in many cases.

About the VOIP tax: is it applied where the call originates or where it is terminated. I'm thinking particularly about the SkypeOut service which I use regularly. I pay an annual fee, and I get unlimited calls within the continental U.S. and Canada. Here's the catch: I live in Canada, so would a new VOIP tax apply to me? Is it added to the annual fee, or would Skype have to start charging a tax on each call? If calls aren't charged based on the destination, how exactly are they charged? Is it based

As much as BushCo and the Republicans ballooned the government and borrowed, Democrats seem to be hell bent on raising taxes like no tomorrow. Not only do we have a tax increases for VoIP from this bill, but their so-called "childrens bill" would have raised cigarette taxes almost 60 cents a pack. Then, you have the looming expiration of the original tax cuts, the global warming tax increase (50 cents a gallon on gasoline, at least, plus an end to the mortgage interest deduction if your house is too big),